Planet Fitness' request to change a New Hampshire tax law cleared its first legislative hurdle last week.
The New Hampshire Senate approved the change in House Bill 550 with a 14-10 vote along party lines on June 4 and sent it to the state's Ways and Means Committee. The bill is expected to be negotiated with the New Hampshire House, the Union-Leader reported.
Planet Fitness has threatened to move its Newington headquarters out of New Hampshire if the legislature will not change a provision in the state's business profits tax before its initial public offering. The Planet Fitness IPO date has not been determined yet.
On May 27, Planet Fitness CEO Chris Rondeau told the New Hampshire Senate Finance Committee that the headquarters employs nearly 200 people at an average salary between $80,000 and $100,000.
At issue is a provision in New Hampshire's business profits tax that adjusts gross business profits in determining taxable business profits. When a business organization sells or exchanges an interest in an organization, the provision adds to gross business profits an amount equal to the net increase in the basis of all underlying assets transferred or sold through the sale or exchange of the interest.
Senate Majority Leader Jeb Bradley, a Republican, called the current taxation structure in this situation 'draconian' and 'detrimental,' according to the Union-Leader report. Bill opponents have expressed fairness concerns as the tax relates to all business operators in the state.
Governor Maggie Hassan, a Democrat, called Planet Fitness a 'valued New Hampshire company' in a statement issued after the Senate's vote in favor.
"While we want to do everything that we can to keep the Planet Fitness corporate headquarters and its high-quality jobs here in New Hampshire, we cannot hastily and without full transparency make drastic changes to our tax laws due to a last-minute request from one company without a deeper analysis of the fairness to other tax-paying businesses in the Granite State and the impact to the state’s budget," Hassan said.
Senate President Chuck Morse, a Republican, supports the bill and said if a solution cannot be found by the end of the session, lawmakers could take the issue up again next year.
The legislative session is expected to end June 30.